LNG

Australian company Elixir Energy is proceeding with appraisal drilling at the Grandis Gas Project in Queensland, located close to the Wallumbilla gas hub and main infrastructure connections to liquefied natural gas export plants and also gave an update on its coal-seam gas exploration in Mongolia.

Elixir has said that government agencies such as the Australian Competition and Consumer Commission (ACCC) and the Australian Energy Market Operator (AEMO) had recently noted a rapidly emerging shortfall between gas demand and supply on the East Coast.

“The new policy does not change demand - but arguably does reduce supply options,” said Elixir, which is listed on the Australian Securities Exchange.

“Advantaged projects such as Grandis are, therefore, placed in an even stronger competitive position,” said the company.

Elixir’s Managing Director Neil Young said he was confident that the Grandis Gas Project has underlying advantages already in place.

Low-risk play

“We've picked up here a very low-risk play in terms of drilling an appraisal well in a location that is advantaged now from a global gas market perspective,” said Young whose company owns 100 percent of the licence.

“The Queensland well can be the most impactful well the company has drilled in this nearly 20 years of being listed on the ASX,” Young added.

“In the location we can access international LNG prices too. A stimulation programme which will follow early in the New Year and then that will take a month or so and then we'll get flows at the end of that,” added Young.

He said that there would be further news coming through as the company passed various stages in the drilling campaign and conducted other activities lasting into the New Year of 2024 because of the depth of the well.

“In Queensland it's going to take a while to get down to the depths,” Young explained.

BG-Shell activities

“This is an appraisal well near where BG Group, later Shell, drilled and spent a few A$100 million about 10 years ago and most of the data from that programme became public as is the case in countries like Australia and we use that data in the proximity to our permits,” he said.

“The contingent resource will actually be near infrastructure and the assets are located about 50 kilometres from what's called the Wallumbilla gas hub, which is both a physical and a market-based trading hub and connects this asset potentially to markets across Queensland and also to Australia’s southeast states of Victoria and NSW,” he added.

“There are also a number of pipelines going Northeast to the LNG plants in the Port of Gladstone which can currently supply East Asian markets but which have declining resources of their own from their foundation assets so there's a wealth of optionality here to target some domestic markets across Australia and also international markets,” Young said.

Young went on to acknowledge that the Nomgon coal-bed methane (CBM) project in the South Gobi Basin of Mongolia had not yielded expected results in terms of flow rates, though the drilling campaign was continuing with new operations.

“The Big Slope-7 appraisal well spudded just over a week ago and has already intersected gaseous coal,” said Young on Elixir’s 100 percent-owned Nomgon IX project.

“The well is now undergoing Injectivity Fall Off Testing (IFOT) to measure permeability in this upper coal section. Big Slope 7 is situated west of the Big Slope-4 well drilled in 2022 and has a planned total depth (TD) of 800 metres,” Young explained.

Mongolia contractor

The well is being drilled by the Mongolian contractor Erdene Drilling LLC and is the first of a number of wells Erdene is contracted to Elixir for drilling in the region.

Elixir added that exploration was also progressing at Bluebill-1. That well has intersected gaseous coal and drilling was ongoing.

“It is a pleasure this year to be working with Erdene Drilling again - they were pioneer drilling contractors with us from 2019 to 2021 - but took a break from CBM work for a year after that,” said Young.

“We look forward to the results of the appraisal drilling program over the coming months. Drilling results from both wells underway are encouraging - and if successful could open up significant new areas to the East and West of Nomgon,” he added.

“Last month Elixir also engaged the services of the THREE60 Energy Group to assist with the production management of the pilot and to boost the company’s drilling support,” Young concluded.

July 29 (LNGJ) - The Australian Energy Market Operator (AEMO) said around 240,800 households across the country changed power companies last month because of soaring prices. The operator said that the total included about 87,000 households in the state of Victoria, 85,000 in New South Wales, 51,000 in Queensland and 17,000 in South Australia. Coal accounts for about 50 percent of Australia's electricity generation, followed by natural gas (16 percent), hydro-electric (5 percent) and 2 percent from oil while the balance mostly comes from renewables.

   Latest Australian natural gas prices in the short-term market were around the equivalent of US$23.35 per million British thermal units for Sydney in NSW, US$23.75 per MMBtu for Adelaide in South Australia and US$23.05 per MMBtu for Brisbane in the state of Queensland, according to AEMO data.

Australian wholesale natural gas prices more than doubled year-on-year and the three LNG plants in the state of Queensland shipped record volumes in the July-to-September period because of higher spot LNG prices and firm demand ahead of the North Asia winter.

The Australian Energy Market Operator (AEMO) said that total East Coast Australia gas demand increased by 5 percent in the third quarter compared with the same period of 2020.

In its third-quarter “Quarterly Energy Dynamics” report, AEMO gave an overview of prices and said that year-to-date demand for LNG from the three state of Queensland export plants, which have a combined nameplate capacity of 25.3 million tonnes per annum, came to over 20.5MT of LNG during the first nine months of 2021.

AEMO noted that the quarterly average prices were at record levels across all East Coast gas markets, averaging $10.74 per gigajoule (GJ) compared with $4.47 per GJ in the third quarter of 2020.

“It is the first time every market has averaged over $10 per GJ,” said the report.

The various Australian wholesale natural gas markets saw prices rising in Adelaide by 113 percent, Brisbane by 155 percent and Sydney logging an increase of 156 percent.

“Queensland LNG exports continue to be influenced by strong Asian LNG demand and record high international gas prices,” said the AEMO report.

“Demand for Queensland LNG is usually lower in the Northern Hemisphere summer but Q3 2021 demand was the highest Q3 on record, and the fourth highest quarter on record,” it added.

“Year-to-date demand has totalled 1,038 PJ, the first time demand has exceeded 1,000 PJ in the first three quarters of the calendar year and is tracking 62 PJ higher than the previous record in 2019,” stated AEMO.

By participant, the Santos-operated Gladstone Liquified Natural Gas (GLNG) recorded the largest increase of 27.7 PJ, while Shell’s Queensland Curtis LNG (QCLNG) increased by 2.4 PJ, and Australia-Pacific LNG (APLNG), operated by ConocoPhillips, increased by 2.1 PJ.

The report added that there were 87 LNG cargoes exported from Queensland  in the July-September quarter, up from 78 in the same period in 2020.

The number of GLNG cargoes exported increased from 21 to 29 over the same period, QCLNG cargoes numbers rose from 28 to 29, while APLNG cargoes numbers were unchanged at 29.